The Alexandria City Council said yesterday it would consider raising the tax on real estate transfers by at least 50 percent, increasing the cost of selling an average $144,000 house by $144 and the cost of buying it by about $260.
The city already charges the highest transfer tax allowed by state law. To increase it, the city would have to persuade the General Assembly to raise its ceiling on the tax.
Council members, who held a daylong retreat at St. Stephen's School to discuss policy questions facing the city, broached the tax increase idea and said they would continue discussions at a regular meeting next month. Municipal administrators told council members that they expect city revenue growth to slow markedly in coming years.
Mayor James P. Moran Jr. proposed that the idea be included in the legislative package to be sent to the city's General Assembly delegation next month. Though council member Carlyle C. Ring Jr. objected, the council agreed to pursue the plan.
Anyone who sells a piece of real estate now pays a tax of $1 per $1,000 of the price, or $144 for a $144,000 house. Most real estate buyers pay taxes that total almost $4 per $1,000 of the price: $2 per $1,000 of the sales price and $2 for every $1,000 of the amount that is borrowed and secured by a deed of trust.
Beverly Steele, assistant city manager for housing, suggested that the council consider doubling the sellers' tax to $2 per $1,000, and increasing the buyers' tax, including the levy on deeds of trust, by almost $2 per $1,000. Like the current tax, the increase would apply to both residential and commercial tracts, and there would be no ceiling on the amount collected.
But Steele would like the city, which shares the proceeds of the current tax with the state, to get all revenue from the increase. The funds would be used to provide housing subsidies for poor and moderate-income residents. Steele said real estate transfer taxes in the District and Montgomery are about four times those in Alexandria.